Mandelson against ‘ideological’ credit crunch battles
By Alex Stevenson
Lord Mandelson has warned against the dangers of an “ideological” approach to dealing with the credit crunch.
The business secretary told Google’s Zeitgeist conference in London he believes “right touch” regulation is what is required to deal with the recession.
Despite many in Labour privately revelling in the recent financial turmoil exposing the dangers of Conservative-style light-touch regulation, New Labour architect Lord Mandelson remained cautious.
“The real warning of the credit crunch is that we can’t be ideological about markets or regulation,” he said.
“The extent to which a market is effective is precisely defined by the extent to which it is appropriately regulated or its limitation observed and its shortcomings offset. Not heavy or light touch, but right touch.”
He said people naturally tend to try and ‘interpret’ a crisis and that this approach can lead people to “misdiagnose the problems”.
“We are entering a dangerous time for politics: the perception that the credit crunch was globalisation out of control; the issue of trust in politics raised by the current problems with politicians’ expenses, the general anxiety that comes with recession,” he continued.
“We have to do everything we can to ensure that this does not create a corrosive cynicism or disengagement. Because cynicism will deflect us from change, a defeatism that reduces risk-taking.”
Lord Mandelson argued politicians have to do their utmost to make people feel empowered despite the recession, by restoring their trust in the banking system, their ability to deal with local problems at the community level and giving them the change to turn their “brilliant ideas” into commercial products.
“This might seem like political idealism at a time when all our efforts should be focused on economic recovery, restoring macroeconomic stability, paying down crisis borrowing,” he added.
“I disagree: I think this kind of politics is actually part of the process of recovery.
“We will not, and should not try to be the same again as in the past. It’s about how we change, how we take control of our economic and political future at an incredibly uncertain time, and in taking control, make it happen, and make it better.”
Later today prime minister Gordon Brown will join Lord Mandelson at a London car dealership to launch the government’s scrappage scheme.
The £300 million initiative, announced in the Budget, will mean consumers scrapping their old banger will receive a £2,000 subsidy when they buy a new car.
“The scheme has been met with a flood of enquiries from customers,” Lord Mandelson said. “It will provide a boost to the industry and kick-start sales.”
